Various commodity products are bought and sold in bulk. One example of these commodity products is plastic resin. The $100 billion virgin plastic resin market can be divided into 2 main categories, engineered resins and commodity resins. They each comprise about half of the market; there are about 33,000 different grades of engineered resins but only a few dozen different types of commodities resins. About half of the commodity resins are purchased on a contract basis, the other half in the spot market.
In the offline world, a typical spot buyer of plastics may call, for example, 5 different distributors/suppliers/ brokers/resellers to try to source the plastic resin required. The buyer may ask the distributor for example “I am here in Chicago and I am looking for 2 truckloads of “High Density Polyethylene-HIC Blow Molding.” Do you have it, and how much is it priced delivered?”
The salesperson on the other end of the phone will typically look into a database and see that they have the 2 truckloads of HDPE-HIC and notices that the nearest warehouse is in Akron, Ohio. The salesperson mentally calculates the freight cost, adds it to the cost of the resin and marks up a profit. The reply may be “Sure, $0.51 per pound delivered.” The buyer writes down the quote and states that they will get back to the seller with an answer.
The buyer then calls a second distributor and asks the same question. This time the seller sees that their nearest source of resin is Houston. After adding the freight to Chicago, the new offer totals $0.525 per pound. This process typically repeats until the buyer has a minimal number of quotes, for example, five quotes. The buyer typically calls the cheapest distributor and purchases the resin.
Once a transaction has been confirmed, the distributor then must contact their logistics department to begin the transportation process. A notice is also sent to the credit department, and they generate a receivable that must be collected. Terms are generally net 30 days; the seller will typically collect in 52-57 days.
With the insurgence of dot-com competition, some online marketplaces for plastics resin have developed. There are catalogues, auctions and bulletin boards. Some include search and sort functions to navigate through the nonstandardized offers of plastic resins. Non-standardized options include quantities ranging from hundreds of pounds to thousands of kilos to metric tons and railcars; priced in US Dollars, Euros, Yen, or Pesos; and delivery methods, with source and delivery locations spanning the globe. Offers may last from hours to weeks, and if a transaction does occur, the buyer and seller must work out delivery logistics and payment terms. In addition, information is private on these types of sites with deals being viewable to only the buyer and seller, preventing price discovery for the rest of the market. Though operational, these marketplaces lack the continuity and assurance of a standardized marketplace such as a commodities exchange.
Thus, there is a need for a method and system for a commodities exchange of bulk products. In addition, the method and system for a commodities exchange should also perform the transactions with anonymity of both parties, in order for a truly unbiased and open market to operate. This invention provides a method for buying and selling commodities in a real-time bid/ask marketplace with all bids and offers anonymous, and all trades for delivery only.